- Pound (GBP) is rising after two days of losses
- UK GDP slowed to 0.1% QoQ in Q3
- Euro (EUR) falls as industrial production rose less than expected
- The ECB are not expected to cut rates again
The Pound-Euro (GBP/EUR) exchange rate is rising after two days of losses. The pair fell 0.29% in the previous session, settling on Wednesday at €1.1328. It traded between €1.1313 and €1.1361. At 13:00 UTC, GBP/EUR trades 0.10% at €1.1340.
The pound is rising against the euro despite data showing that the British economy grew in the third quarter of this year. According to data from the Office for National Statistics, UK GDP was just 0.1% quarter-on-quarter in the July to September period, down from 0.3% growth in the second quarter. Economists had expected growth of 0.2% for the period. Weaker growth came as the economy was held back by September’s cyber attack on Jaguar Land Rover and amid signs of caution ahead of finance minister Rachel Reeves’ budget later this month.
The softer growth will be a headache for the chancellor, who is already struggling with a productivity downgrade and high spending.
Following several disappointing data releases this week, investors have raised expectations that the Bank of England will cut interest rates next month to 82%, up from 60% earlier this week.
A euro is slipping against the pound but is rising against the weaker U.S. dollar as investors digest the latest industrial production data.
Data showed that industrial production rose 0.2% month on month in September, attempting to rebound after a revised 1.1% decline in August. However, this was still below market expectations of 0.7% growth. Global competition, a strong euro, and the impact of US tariffs are still playing out for manufacturers, keeping them cautious about a significant short-term revival of the sector.
Despite today’s decline, the euro remains at multi-year highs against the pound, supported by expectations that the European Central Bank has completed its monetary policy easing cycle.
